Executive Summary

Q4 FY2015 delivered solid profitability: net income $1.245M and diluted EPS $0.21, with net interest margin expanding to 3.89% and interest rate spread to 3.80% . Sequentially, net interest income improved to $4.301M (Q3: $4.208M; Q2: $3.448M) on higher earning asset balances and lower funding costs .
Noninterest income surged to $593K (+439% YoY), driven by mortgage banking income ($170K), higher service charges, and gains on sales of purchased credit impaired loans ($255K) .
Asset quality remained strong despite acquisition-related inflows: nonperforming loans/total loans 1.35% (Q3: 1.47%; Q2: 1.43%), and allowance/loans 0.32% (Q3: 0.27%; Q2: 0.26%) .
Dividend maintained at $0.10 per share; Board declared the quarterly dividend (record Aug 13, 2015; payable ~Aug 27, 2015) supporting income returns .
No earnings call transcript or Wall Street consensus estimates available; comparisons to Street were not possible (S&P Global data unavailable) .

What Went Well and What Went Wrong

What Went Well

“Fiscal year 2015 was a remarkable year” with successful Stephens Federal acquisition; management cited liquidation of problem assets and incremental interest income from acquired loans, driving a “significant increase” in quarterly and year-end net income .
Net interest margin expanded (quarter: 3.89%; year: 3.73%, +43 bps YoY), reflecting lower cost of funds (0.32% in Q4) and higher yield on earning assets (4.12% in Q4) .
Mortgage banking capability via Freddie Mac platform unlocked new origination/sale opportunities (e.g., 30-year fixed), adding $170K in Q4 mortgage banking income and $351K for FY15 .

What Went Wrong

Nonperforming assets increased due to acquired portfolios: NPAs/total assets rose to 1.42% (from 0.66% prior year); NPLs/loans to 1.35% (from 0.71%), with $2.8M of NPLs identified as purchased credit impaired .
Noninterest expense rose to $2.605M in Q4 (+55% YoY) on higher salaries/benefits (+$640K), occupancy/equipment (+$176K), and data processing costs tied to acquisition integration .
Originated loan balances and deposits (ex-acquisition) saw softness: loans declined by ~$16M and deposits by ~$26M as CD customers sought higher yields in markets amid low-rate environment .

Financial Results

Metric ($USD thousands, except per share and %)	Q2 2015 (Dec 31, 2014)	Q3 2015 (Mar 31, 2015)	Q4 2015 (Jun 30, 2015)
Interest and dividend income	3,763	4,517	4,598
Interest expense	315	309	297
Net interest income	3,448	4,208	4,301
Provision for loan losses	9	7	179
Noninterest income	257	486	593
Noninterest expenses	1,990	2,881	2,605
Income before income taxes	1,706	1,806	2,110
Income taxes	659	610	865
Net income	1,047	1,196	1,245
Diluted EPS ($)	0.18	0.21	0.21
Net interest margin (%)	3.70%	3.76%	3.89%
Interest rate spread (%)	3.64%	3.70%	3.80%

KPIs and Financial Condition

KPI / Balance	Q2 2015	Q3 2015	Q4 2015
Total assets ($)	487,988	482,701	475,427
Loans receivable, net ($)	330,038	321,482	308,259
Deposits ($)	407,355	400,777	394,093
Total equity ($)	79,300	80,551	80,790
NPLs / Total Loans (%)	1.43%	1.47%	1.35%
NPAs / Total Assets (%)	1.64%	1.51%	1.42%
Allowance / Total Loans (%)	0.26%	0.27%	0.32%
Dividends declared per share ($)	0.10	0.10	0.10

Segment breakdown: Not applicable; OFED reports consolidated banking operations without separate segments .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Quarterly dividend per share	Q4 2015	$0.10 (ongoing)	$0.10 declared (record Aug 13; payable ~Aug 27)	Maintained
Formal financial guidance (revenue/margins/OpEx/tax)	Q4 2015	None	None	No guidance provided

Note: Management did not issue forward financial guidance; only capital return actions (dividends/repurchase program status) were disclosed .

Earnings Call Themes & Trends

No Q4 FY2015 earnings call transcript found; themes below reflect management’s prepared remarks/MD&A across filings.

Topic	Previous Mentions (Q2 2015)	Previous Mentions (Q3 2015)	Current Period (Q4 2015)	Trend
Acquisition integration (Stephens Federal)	Goodwill $3.658M; fair value adjustments; integration costs $706K; expanded GA footprint	Continued integration; pro forma details; strong NIM lift from acquired loans	Management: acquisition enabled liquidation of PCI assets and increased interest income; footprint expansion into GA counties	Positive operational impact; earnings accretive
Mortgage banking/servicing (Freddie Mac)	Platform established; mortgage banking income $34K; servicing rights $1.341M	Mortgage banking income $147K; servicing rights fair value dynamics	Mortgage banking income $170K; enables 30-year fixed originations to manage IRR	Expanding contribution
Asset quality	NPLs/loans 1.43%; NPAs/assets 1.64% (acquisition-driven)	NPLs/loans 1.47%; NPAs/assets 1.51%	NPLs/loans 1.35%; NPAs/assets 1.42%; allowance 0.32%	Stabilizing post-acquisition
Funding cost/Net interest margin	Cost of deposits 0.40%; NIM 3.70%	Cost of deposits 0.33%; NIM 3.76%	Cost of deposits 0.32%; NIM 3.89%	Ongoing margin expansion
Deposits/loan demand	Deposits down ex-acquisition (−$12.8M); CDs reprice lower	Continued deposit pressure; shift away from CDs	Deposits ex-acquisition down ~$26M; lower loan demand in originated portfolio	Soft organic demand amid low rates
Taxes	Effective rate ~36%	Effective rate 33.8% (Q3)	Q4 effective rate 41.0% due to nondeductible acquisition-related costs	Elevated in Q4 due to one-time items

Management Commentary

CEO T. Rhett Evatt: “Fiscal year 2015 was a remarkable year… Our footprint now extends into Stephens and Rabun counties… liquidation of problem assets and additional interest income from acquired loans resulted in a significant increase in our quarterly and year end net income.”
CFO H. Allen Salter: “Our strong return on average assets is a testament to… sustained low overhead… earnings have been positively impacted by the successful liquidation of… nonperforming assets… acquisition of a secondary mortgage platform with Freddie Mac… The bright side of the low interest rate environment is a lower cost of funds, which has led to an increase in our net interest margins.”

Q&A Highlights

No earnings call transcript was available for Q4 FY2015; therefore, no analyst Q&A themes or guidance clarifications could be extracted .

Estimates Context

S&P Global consensus estimates (EPS and revenue) for OFED Q4 FY2015 were unavailable; our attempt to retrieve SPGI data returned an error indicating access limits exceeded, and coverage for micro-cap thrift institutions may be limited. As a result, comparisons to Wall Street consensus could not be provided (Values retrieved from S&P Global unavailable).

Key Takeaways for Investors

Margin expansion continues: NIM rose to 3.89% in Q4 (from 3.76% in Q3; 3.70% in Q2) on both higher asset yields and lower deposit costs, a key earnings driver in a low-rate environment .
Noninterest income diversification is working: mortgage banking and servicing contributed meaningfully, alongside gains from PCI loan resolutions, supporting fee income growth .
Acquisition benefits are evident: increased earning assets, improved yields, and operational capabilities (Freddie Mac) underpin net income growth, while asset quality metrics stabilize post-acquisition .
Expense base elevated but manageable: integration-related increases in salaries, occupancy, and data processing inflated noninterest expenses; watch for normalization and cost synergies going forward .
Capital return maintained: the $0.10 quarterly dividend was reaffirmed; repurchase program remains authorized, though buybacks were minimal in FY2015 .
Organic demand remains soft: originated loans and deposits declined ex-acquisition amid low-rate dynamics and depositor migration to market yields; monitor loan growth and deposit mix trends .
Tax rate elevated by non-deductible acquisition costs in Q4 (41.0%); expect normalization absent similar items .

Oconee Federal Financial Corp. (OFED)·Q4 2015 Earnings Summary